Dec 13 - European banking regulators warn consumers against hacking and other risks associated with online currencies like Bitcoin. It follows similar advisories from the Bank of France and the Chinese central bank - and adds pressure to calls for the sector to be regulated. Hayley Platt reports.
Its value has soared in recent months, making Bitcoin a favourite with investors. But its popularity is causing concern for authorities world-wide. The European Banking Authority has issued a formal warning to consumers. It said people have no protection if things go wrong because currently there's no regulation. Mike Ingram BGC partners. SOUNDBITE: Mike Ingram, market strategist, BGC Partners, saying (English): "We have had cases in the past where the computers, the mainframes which are being used to mine the Bitcoins have been hacked into, so the money creation process has actually been hijacked. The other concern is that at the moment it's really the speculators that have the whip-hand and we've seen the price of Bitcoins rise something like a 100-fold over the last year or so." Complex computer algorithms are used to create the so called crypto-currency. But it isn't backed by a central bank or government. Its value depends on people's confidence in the currency, making it volatile and that's the problem. The Bank of France and China's central bank have already warned against it. But the U.S. said it could be useful if it helps prevent money laundering. Not everyone's convinced. SOUNDBITE: Mike Ingram, market strategist, BGC Partners, saying (English): "At the moment where you say you're having to exchange real money, dollars for argument's sake, for Bitcoins, so in a way you could take the view that the existence of Bitcoins might actually help the integration of illicit funds into the global financial systems, so I think it's a very tricky subject that politicians will be discussing for years to come." With or without regulation virtual currencies are here to stay. And Bitcoin could become the catalyst for the continued shift from physical currencies to electronic ones.